Genuineness of transactions requires verifiable evidence; unproved land-sale and buy-back arrangements were treated as a tax device.

The article explains that where an assessee claims land-sale, arbitration and buy-back transactions, the burden lies on it to prove genuineness through reliable, verifiable evidence. In the stated facts, the alleged agreements were unregistered, originals were not produced, photocopies showed inconsistencies, the notary record did not support the documents, and two parties denied the transactions. The surrounding facts, including the collaboration agreement and the assessee's earlier statement, indicated that the arrangements were not authentic business dealings but a device to reduce tax liability. On that basis, the addition made by the Assessing Officer was restored and the assessee's claim failed.

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Issues: (i) Whether the assessee had proved the genuineness of the land sale, arbitration and buy-back transactions entered into with ten parties so as to justify deletion of the addition made by the Assessing Officer.

Analysis: The transaction pattern, read with the collaboration agreement, raised serious doubts because the assessee had agreed to develop the land with Omaxe, yet purported to sell plots before the plots came into existence. The alleged agreements were not registered, originals were not produced, and the photocopies contained inconsistencies in signatures, witnesses and notarisation. The notary's verification also did not support the assessee's case because the original documents were not produced and the notary's register did not contain supporting entries. Two parties specifically denied the transactions, while the Supreme Ceramics transaction was found inconsistent with the assessee's own earlier statement and the surrounding facts. The assessee therefore failed to discharge the burden of proving that the claimed loss and payments were genuine business transactions rather than a device to reduce tax liability.

Conclusion: The deletion of the addition was unsustainable and the disallowance made by the Assessing Officer was liable to be restored in favour of the Revenue.

Final Conclusion: The appeal succeeded because the assessee's transactions were not established as genuine business dealings and the Assessing Officer's addition was upheld.

Ratio Decidendi: Where the assessee cannot prove the authenticity and genuineness of transactions through reliable, verifiable evidence, the claim based on such transactions may be treated as a colourable or paper arrangement and the corresponding addition or disallowance can be sustained.

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